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Where late-model auction prices could be headed

Tuesday, Aug. 01, 2017, 04:29 PM

By Joe OverbySenior Editor

CARY, N.C. -

If history is any indication, you can expect auction prices on late-model units to decline even more rapidly as the second half of the year continues.

According to the latest Blue Book Market Report from Kelley Blue Book, there was a 2.6-percent drop in the auction values of 1- to 3-year-old vehicles in the second quarter.

In the first quarter, the values of these cars fell 1.4 percent, according to KBB.

Though the gap was wider last year, these figures are somewhat comparable to what happened in 2016, when late-model auction values fell 1.2 percent in Q1, then 3.3 percent in Q2.

That steeper decline further accelerated in the second half of 2016, as values dipped 4.5 percent in Q3 and 6.6 percent in Q4, KBB said.

“As we enter the second half of the year, auction values historically begin to fall at an increasing rate,” KBB analyst Sean Foyil said in the report.

Through six months, the value on late-model cars at auction is down 4 percent, Kelley’s report found.

As to what happens in the second half, it’s likely more declines, perhaps for both this segment of wholesale vehicles and for the larger group of units reaching the auction lanes.

J.D. Power Valuation Services, whose latest pricing forecast included vehicles up to 8 years in age, is calling for about a 6-percent in wholesale prices for full-year 2017. A year ago, prices fell 4 percent.

J.D. Power counts gains in supply and incentives a “normalizing retail environment” as the reasons for the downturn.